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Higher inflation in the US is raising expectations of rate hikes, the dollar is weakening, and the zloty is stronger
The dollar weakens after U.S. data, giving the zloty some breathing room
Inflation in the U.S. came in above expectations in the CPI (Consumer Price Index) reading, briefly lifting market jitters. In September, the measure rose from 3,4% to 3,7%, and core inflation proved stronger than forecasts. For people exchanging money in Poland, though, the key point was that the dollar quickly gave back part of its gains, while the zloty gained room to strengthen.
In the morning, EUR/PLN was at 4,3715 zł. That meant that 1000 zł could buy about 228 euros. Over the past three weeks, the euro has been moving in a range of 4,36-4,40 zł, while the 4,39-4,40 zł zone remains an important resistance level, meaning a point where buyers face stronger market opposition.
The initial reaction was clearly sharper. Yields on U.S. Treasury bonds rose by 10-15 bp as the market started to price in a greater chance of a rate hike by the Fed at the October FOMC meeting. Later, the tone from central bank officials was calmer, which reduced expectations for a quick tightening of U.S. monetary policy.
A sell-off in semiconductor stocks also helped. Demand for Treasuries, or U.S. government bonds, increased, and their yields edged lower. As a result, EUR/USD bounced after the pair set a multi-month low on Wednesday. The weaker dollar also improved sentiment toward emerging-market currencies.
The effect is visible in USD/PLN. On Thursday morning, the dollar cost 3,8989 zł, or two grosze less than before. On a 5000 zł exchange, that means about 100 zł more in dollars than at a rate two grosze higher. Earlier in the week, USD/PLN was above 3,93 zł and was approaching the psychological 4 zł barrier.
CHF/PLN was also little changed, trading at 4,6962 zł in the morning. Meanwhile, GBP/PLN was at 5,1634 zł, or 0,6 grosza less than a day earlier. On Monday, the pound reached 5,1954 zł, its highest level since December 2024. PKO BP analysts maintain their forecast that the FOMC will raise interest rates again before the end of this year, possibly as soon as October, and then pause further moves.
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